Correlation Between CVB Financial and BankUnited

Can any of the company-specific risk be diversified away by investing in both CVB Financial and BankUnited at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining CVB Financial and BankUnited into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CVB Financial and BankUnited, you can compare the effects of market volatilities on CVB Financial and BankUnited and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in CVB Financial with a short position of BankUnited. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVB Financial and BankUnited.

Diversification Opportunities for CVB Financial and BankUnited

0.95

Correlation Coefficient

CVB Financial  BankUnited

Almost no diversification

The 3 months correlation between CVB and BankUnited is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding CVB Financial and BankUnited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankUnited and CVB Financial is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on CVB Financial are associated (or correlated) with BankUnited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankUnited has no effect on the direction of CVB Financial i.e., CVB Financial and BankUnited go up and down completely randomly.

Pair Corralation between CVB Financial and BankUnited

Given the investment horizon of 90 days CVB Financial is expected to under-perform the BankUnited. In addition to that, CVB Financial is 1.28 times more volatile than BankUnited. It trades about -0.2 of its total potential returns per unit of risk. BankUnited is currently generating about -0.21 per unit of volatility. If you would invest  4,147  in BankUnited on October 8, 2024 and sell it today you would lose (273.00) from holding BankUnited or give up 6.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.0%
Values	Daily Returns

CVB Financial  vs.  BankUnited

CVB Financial

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CVB Financial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting fundamental drivers, CVB Financial reported solid returns over the last few months and may actually be approaching a breakup point.

BankUnited

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BankUnited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady forward-looking signals, BankUnited unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CVB Financial and BankUnited

The main advantage of trading using opposite CVB Financial and BankUnited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVB Financial position performs unexpectedly, BankUnited can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in BankUnited will offset losses from the drop in BankUnited's long position.

The idea behind CVB Financial and BankUnited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.